Chapter 5: Corporate Ethical Governance & Accountability
Q1) What is the role of a board of directors from an ethical governance standpoint?
The role of the board of directors from an ethical governance standpoint is to review the overall strategy of a business as far as ethical behaviour and objectives. They select and compensate senior executives of the company, oversee financial statements, and monitor overall performance. Their main duty is to safeguard the interests of the company’s shareholders while also maintaining the interests of stakeholders. The board therefore has a very important role as far as ethical governance as they set the tone from the top.
Q2) Explain why corporations are legally responsible to shareholders but are strategically responsible to other stakeholders as well.
Corporations are legally responsible to shareholders as shareholders own rights to the company through stock options, and they are also strategically responsible to stakeholder’s (which includes shareholders) as stakeholders are the foundation of support for a company. Without the support of stakeholders, a company can fail to meet the goals and objectives they wish to reach. Therefore it is important that corporations take the interests of stakeholders into careful and strategic consideration in order to have the most support possible
Q3) What should an employee consider when considering whether to give or receive a gift?
Employees should consider the policies and guidelines of the corporation when it comes to deciding whether to accept a gift or not. They should also consider possible legal implications, especially for accountants. They should analyse the intentions behind the gift and whether it is a means of persuasion or bribery. If the employee has any hint that the gift may not be in accordance with company policies or has another meaning behind it, they should refuse the gift politely.
Q5) How can company control and manage conflicts of interest?
A company can manage and control conflicts of interest by implementing and following through with codes of conduct regarding behaviour. They can also manage conflicts of interest by setting examples from the top management down on how to manage these issues within the workplace. A company can also implement a program that can address conflicts of interest amongst employees and help with the decisions to follow.
Q6) What is the role of an ethical culture and who is responsible for it?
The role of an ethical culture is a basis of guidelines for how to handle and manage situations and make decisions in a moral and ethical manner so that all stakeholders’ interests can be considered and the correct and right actions are taken so no one is taken advantage of. It is how a corporation is run and the morals and ethics the company as a whole stands behind. Everyone is responsible for this ethical culture. Of course The board of directors and top management should be setting the tone and being role models for the ethical culture they wish to promote for their company, but it does come down to every single person who is responsible for making their decisions and taking actions in accordance with the moral and ethical standards a corporation has taken on, written or not.
Q7) What is the most important contribution of a corporate code of conduct?
The most important contribution of a corporate code of conduct is the organizations values, which represent the major organizational structure in which the company implements ethical policies.
Q9) What should codes focus on principles rather than specific detailed rules?
Codes should focus on principles rather than specific rules so that they can encompass and regulate a broad range of actions and decisions. When rules become specific people tend to find ways around them. In addition, there are so many different circumstances that it would be almost impossible to create a detailed rule for each. Principles are more aligned…